Levy cuts show Government Up

The announcement today that ACC levies will be drastically cut shows the government cried wolf when it told New Zealanders the ACC scheme was in a funding crisis, according to the ACC Futures Coalition.

“The size of the cuts indicates that Nick Smith’s statements in 2009 that ‘if ACC was an insurance company, it would be insolvent’ was overstated and scaremongering,” said ACC Futures Coalition spokesperson Hazel Armstrong. “ACC has had a substantial cash surplus every year since 2008. Their investments took a hit in the financial crisis but they have come back strongly, as was reasonably predictable based on the better than average performance of the investment team at ACC.”

“The government hit the panic button in 2009 and hacked into claims costs, targeting areas like elective surgery, long term claims, sensitive claims and hearing loss. Nearly 40% of the savings that have allowed the levy to be cut have come from cutting claims costs, which will have involved declining more claims”, said Ms. Armstrong.

“They overstepped the mark in cutting back on elective surgery – declines increased from11% in 07/08 to 22% in 09/10, which was outrageous, and many people who should have been treated missed out. Their own internal review report released in May this year showed that they had got it wrong.”

There has been a 20% reduction of people on long term claims. Unfortunately injured people have been kicked off the scheme before they are ready to return to work. The Courts are clogged up with cases pending a hearing or waiting on a decision from the Court. There are 800 cases currently before the Courts. Just a day or two ago the Supreme Court has just issued a landmark decision saying that ACC must comply with the law before it sends people off for vocational independence assessments.

“It is not clear to us whether the government knows what it is doing,” said Ms. Armstrong. “If they did know that they could make changes that would lead to levies being reduced (by 17% in the case of earners and 22% in the case of employers) then it appears that they have manipulated the situation just in time for election year. If they didn’t know then they have damaged a lot of people along the way while pursuing illusory actuarial targets. Which is it?”